Xbox is facing a difficult reality as it navigates a major restructuring, including the planned layoff of 3,200 employees in the coming months. In a recent memo to staff detailing the company's path forward, Xbox CEO Asha Sharma explicitly pointed to the underperformance of its primary subscription service, noting that Xbox Game Pass “did not grow at the pace we expected.”
The scale of that shortfall is stark. According to a recent report from the Wall Street Journal, the service currently sits at 30 million subscribers. This figure is less than half of the 77 million subscribers Microsoft had initially projected to reach by July 2026. These original targets were brought to light during the Federal Trade Commission’s investigation into Microsoft’s acquisition of Activision Blizzard, providing a rare look at the internal ambitions for the service.
The Stakes for the Future of Xbox
The pressure on these numbers has been public for some time. During the FTC proceedings, former Xbox CEO Phil Spencer addressed the growth projections, acknowledging that the company had specific benchmarks for the service's success. Spencer stated that if the company failed to see sufficient progress in subscriber growth off-console by fiscal year 2027—targeting over 40 million subscribers on Xbox alone—the company would likely exit the gaming business entirely.
While Spencer suggested at the time that those internal projections might have been exaggerated to frame the company's position during regulatory scrutiny, the reality of the current 30 million subscriber count confirms a significant gap between ambition and performance. Microsoft’s 2027 fiscal year began on July 1, 2026, and the company remains well below the figures cited during the hearing.
A Pattern of Stagnation
The path to the current 30 million figure has been turbulent. The last time Microsoft provided a public update on Game Pass was in February 2024, when the company claimed 34 million users. Since that time, the service has faced notable headwinds.
Xbox chief strategy officer Matthew Ball noted that the service lost millions of players following a series of price increases implemented in October 2025. Despite Sharma’s recent comments that the service has begun to grow again after eight months of decline, it has yet to recover to its previous peak. This ongoing struggle to retain and attract subscribers is a central factor in the current gaming news surrounding the brand's pivot in strategy.